POM Wonderful, Round 3: ‘Disclosure’ vs. ‘Outright Suppression’

Written by William I. Rothbard on Wednesday, March 13th, 2013

The ongoing battle between the Federal Trade Commission (FTC) and the billionaire owners of POM Wonderful is no longer really about whether the company over-hyped the curative powers of its popular fruit juice. Both the administrative law judge (ALJ) and the Commission, on review, agreed that a number of claims that POM juice prevented, treated or reduced the risk of heart disease, prostate cancer and erectile dysfunction were deceptive.

The Commission went farther, however, faulting the ALJ for not finding enough misleading claims and for not imposing a stricter substantiation standard of two controlled human clinical trials (RCTs). In so doing, the FTC majority went too far for Commissioner Maureen Ohlhausen, who parted ways on the issues of claim interpretation and substantiation in a thoughtful separate statement that sets the table for the next round of this heavyweight bout, to be played out in the U.S. Court of Appeals (and then, quite possibly, in the Supreme Court). Which view prevails – hers or the majority’s – will shape an important area of FTC advertising jurisprudence and the nature of health advertising for food and dietary supplements for some time to come.
In the Ohlhausen view, the majority went too far in two ways: it exceeded its authority by finding a number of “implied” disease claims based on its own facial reading of POM’s ads rather than extrinsic evidence showing that consumers perceived the claims, too; and it imposed an excessive substantiation requirement (two RCTs).

On claim interpretation, the majority said the FTC has the “common sense and expertise” to find implied claims without the need for evidence of consumer perception, as long as those claims are “reasonably clear.” Thus, it didn’t need extrinsic evidence to find a number of implied disease efficacy claims the ALJ said he couldn’t find.

For example, the majority found an implied heart disease claim in statements that POM juice will help “keep your ticker ticking” and the “sooner you drink it, the longer you will enjoy it.” It also found an implied prostate cancer claim in the phrase, “Drink to prostate health,” and language equating POM juice to “good medicine.” And implied “establishment” (“clinically proven”) claims were inferred from study references, notwithstanding the presence of qualifiers such as “preliminary,” “promising” or “hopeful.” These adjectives didn’t negate the “clinically proven” claim because, in the majority’s judgment, they “provide a positive spin on the studies.”

Commissioner Ohlhausen disagreed with many of these findings. She would have required extrinsic evidence to prove establishment claims where study qualifiers were used. She also would have demanded proof of implied efficacy claims where POM’s ads referenced health maintenance without mentioning disease, or where, in her opinion, the majority conflated disease treatment claims with prevention/risk reduction claims.

On substantiation, the majority held that RCTs are required not only for disease-related establishment claims, but also for efficacy claims, which don’t convey a level of proof. To be an RCT, a study has to: 1) be placebo-controlled, randomized and, where feasible, double-blinded; 2) test known predictors of the incidence of the disease; and 3) produce results that are statistically significant. Further, POM would need to have not one but two RCTs.

Ohlhausen said this was overkill, writing, “Although it might provide the Commission with some subjective comfort, requiring two RCTs does so at the expense of limiting consumer access to potentially useful information. The product at issue is an admittedly safe food product – a type of fruit juice. To set an unnecessarily high bar for such a product is in tension with…our policy commitment to avoid imposing ‘unduly burdensome restrictions that might chill information useful to consumers in making purchasing decisions.’”

She also cited First Amendment concerns to the extent the two-RCT requirement conflicts with the commercial speech doctrine’s preference for “disclosure over outright suppression.” Overall, noting that substantiation standards and claim interpretation are “inextricably linked,” Ohlhausen cautioned that if the FTC is “too quick to find stronger claims than the ones consumers actually perceive, then we will inadvertently, but categorically, require an undue level of substantiation for those claims.”

Ohlhausen’s separate statement has crystallized the central questions for appellate review of the majority decision in this case. Will the higher courts defer to the FTC’s asserted expertise to find implied claims in almost every instance without empirical evidence of how consumers actually perceive the claims? And will they favor “disclosure” or “outright suppression” in evaluating the RCT substantiation requirement for disease claims (and, indirectly, weight loss claims, since the FTC also now requires two RCTs for them)?

The future of health-related advertising for food and dietary supplements hangs in the balance, for there can be no doubt that a prohibitively expensive two-RCT requirement (or even one) for disease, weight-loss and perhaps other health claims will result in the “outright suppression” of useful consumer information.